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ON AN AVERAGE 300 BANK EMPLOYEES SUSPENDED ANNUALLY FOR ACCOUNT FRAUDS

BENGALURU: The post-demonetisation scrutiny of bank employees may have hogged limelight but bank officials have faced action for involvement in borrowal account frauds for years now. Data accessed from the

Reserve Bank of India (RBI) and the ministry of finance shows that 1,674 bank staff, including 148 from Karnataka have been suspended in connection with such cases between April 1, 2011 to December 31, 2016, at an average of 291 per financial year.

The suspended officials-several of them have returned to work-are from 49 banks, including private and foreign banks like Citibank. The number of fraud cases where bank employees were found to be involved are 856 but the total number of such frauds are more.

While a consolidated number of such cases or the extent of loss for all the said years was not immediately available, RBI data shows that in 2015-16 alone banks incurred a loss of Rs 15,841 crore in as many as 2,256 cases-and officials were involved in a handful of these cases. The data for the present year is being complied.

BANKS TO PROPOSE NEW SCHEME TO GET RID OF STICKY LOANS

MUMBAI: A mountain of sticky loans stare at them. Past lending decisions have put a few of their colleagues behind bars. And, none of the fancy schemes – which once appeared promising – have taken off in a meaningful way to recover bad loans and revive distressed borrowers.

Grappling with these stark realities, the country’s top bankers met a week ago to discuss the possibility of a deep — and perhaps a more realistic — loan rejig programme that would retain the existing management of a defaulting company, convert a substantial part of irregular debt into stocks, and minimise promoter contribution.

“Banks are in the process of submitting their proposal to the Reserve Bank of India..it will need regulatory sanction as the rules of the old corporate debt restructuring (CDR) mechanism as laid down by RBI will have to be changed for this,” a senior official of a large bank to ldET.

NEW PLAN

In case of companies which undergo a change of promoter and management, some banks have further suggested that a committee comprising external consultants, senior lawyers, and bankers should be constituted to evaluate the bids from business groups that are interested to acquire the stake and run a troubled company. Under the present CDR scheme –which reschedules loans to give defaulting companies a longer and easier repayment chance –not more than 10% of the outstanding debt can be converted into equity.

VEHICLE FINANCING AT 10 YEAR LOW

Chennai: Planning to buy a car? This may be as good a time as any. According to auto finance experts, passenger vehicle financing rates are now the lowest in 10 years. Following the rate cut in January, the lowest interest slab has now gone down to 8.75%. Even mass market cheap and cheerful models are now available in the 9.75-10% range. All of which means, the interest rates are now back to January 2006 levels. “There have been two or three rate cuts in the past one year which have made the rate regime very attractive for customers,” said Ashok Khanna, senior executive vice-president and business head, vehicle loans, HDFC Bank.

“Currently the super luxury segment vehicles attract around 8.75-9% rates, mid-size sedans like Honda City or Maruti Suzuki Ciaz around 9.25%, B-segment premium hatchbacks like Maruti Suzuki Baleno, Hyundai i20 around 9.5% and entry level cars like the Maruti Suzuki Alto around 10-10.25%. At this level the rates are lowest in recent memory,” added Vyomesh Kapasi, CEO, Kotak Mahindra Prime.

Just how much have the rates come down? Back in January 2006, B-segrack rates hovered around 10-10.25%. For bigger mid-size cars, the rates were 9.5%-10%. By summer of 2007 the interest rates had jumped to 14.75% for an entry level compact car like the Alto and 14.5% for bigger cars, a 5% markup in 12 months. Rates stabilised a bit in the next couple of years and by February 2011 the rack rate range spanned 11.5 to 13.5% depending on vehicle type and loan tenure. That came down just a tad in the next 19 months – by September 2013 the rack rate or official rate on offer was anywhere between 10.5-11.5% depending on down payment, loan amount and credit history.

A year on competitive pressure led to rate reduction with the lowest slab coming down to 10% for banks and 9-9.25% for some NBFCs by September 2014. Of course, big volume mid-size cars continued to attract higher rates at around 10.5-10.75% while entry level hatchbacks came in at 10.75-11.25% Repeated rate cuts in the next one year by the RBI led to more rationalisation and the rack rates hovered around 11-11.25% for entry level cars, 10.5% for B-segment cars, 10.25% for C-segment sedans and 10% for premium cars by September 2015.

INDIA INC’S RESOURCE MOBILIZATION DIPS

Chennai: With economic recovery not picking pace, India Inc hasn’tbeen tapping the markets in a big way for raising money in the current financial year. The total resources mobilised by corporates declined 14.3% year-on-year to around Rs 4.99 lakh crore in the first eight months of 2016-17. The total funds raised by companies under the equities route has fallen drastically. Firms have mobilised Rs 55,748 crore through equity issues between April and November 2016, a 38.2% year-on-year (y-o-y) fall.

Though the money raised through public and rights issues dropped only marginally, there was a steep decrease in mobilisation under the private placements route. Corporates managed to mop up only Rs 31,319crore through private placement of equity between April and November,a 51.9% y-o-y fall, data with markets regulator Sebi showed. Private placement of corporate debt too declined 8.4% y-o-y to about Rs 4.19 lakh crore. Funds mobilised by companies listed on the BSE and NSE through QIPs (qualified institutional placements) was only Rs 4,318 crore in the first eight months of 2016-17, which is only about a third of the money they got under the route in the same period the previous year.

“The confidence (about the economy) is not back yet,” said Pranav Haldea, MD, PRIME Database, which compiles data on the primary capital markets. “There is not too much fresh capital being deployed for capacity expansion,” he said. “Most corporates are not comfortable about raising debt at high cost,” said Deven R Choksey, MD, KR Choksey Shares and Securities. The only silver lining has been the primary markets with a marked increase in both debt and equityissuances so far in the current financial year. The mobilisation through the primary market jumped more than two-fold to Rs 48,324 crore during the period. Funds raised from initial public offers (IPOs jumped 2.4 times to Rs 23,124 crore. Sebi data showed. On an overall basis, equity issues got 33.8% more money through the primary markets between April and November 2016. Preferential allotment shares however saw a decline during the period. Firms managed to get Rs 27,001 crore from 279 issues, a 46.5% y-o-y fall in value terms. Capital raised by listed companies from primary markets through QIPs plunged 70.4% to Rs 4,318 crore, Sebi data showed.

 

PILOTS FAILED TO PRE-FLIGHT BREATHING TEST

NEW DELHI: The menace of tipsy pilots seems to be on the rise in India. As many as 224 pilots tested positive in their pre-flight breath analyser (BA) checks – up 11% from 2015 figure of 202, according to the Directorate General of Civil Aviation (DGCA).

All pilots operating domestic flights have to undergo pre-flight alco tests to ensure only sober ones get inside cockpits and then safely fly. On international flights, pilots have to undergo post-flight checks as liquor is available on board those flights.

A pilot is grounded for three months, three years and forever after failing pre-flight BA test for the first, second and third time, respectively. Those failing the breath analyser tests in post-flight checks get a year added to these groundings. In 2016, the DGCA for the first time directed registering first information reports against two pilots and three cabin crew members of commercial airlines who were found tipsy after operating international routes in post-flight BA tests.

INDUSTRIAL OUTPUT CONTRACTS

NEW DELHI: A month after the government went in for demonetisation, India’s industrial output contracted by (-) 0.4 per cent in December, official data showed last week.

The factory output, as per the Index of Industrial Production (IIP), had risen by 5.7 per cent in November, 2016. Earlier, it encountered a (-)0.9 per cent slide in the corresponding month of the previous year. As per the IIP data released by the Central Statistics Office (CSO), the contraction was mainly on account of a 2.00 per cent decline in manufacturing output, which has the maximum weight in the overall index.

INDIRECT TAX REVENUE GROWS

NEW DELHI: Government’s revenue collection from indirect tax grew by an impressive 23.9 per cent during the April-January period, while that from direct tax rose by 10.79 per cent. Total direct and indirect tax collections at the end of January stood at Rs 12.85 lakh crore, 76 per cent of the Rs 16.99 lakh crore target, as per revised estimate for 2016-17.

Belying fears of slowdown due to demonetisation, indirect tax collection grew at a decent 16.9 per cent in January buoyed mainly by excise, reflecting an uptick in manufacturing. At the end of January, the total direct tax collection stood at Rs 5.82 lakh crore and indirect tax-mop up was Rs 7.03 lakh crore led by robust collections in personal income tax and excise duty, respectively.

Direct tax revenue includes corporate and personal income tax. Indirect tax takes into account mobilisation from excise, service tax and Customs duty. The gross collection of corporate income tax (CIT) grew at 11.7 per cent while under personal income tax (PIT), it was 21 per cent over the corresponding period last fiscal.

FIRST STARTUP DISTRICT WITH INCUBATION CENTERS

NEW DELHI: India will soon have its first startup district with incubation centres and about 20 tinkering labs for schools aimed at encouraging the creation of innovative solutions in agriculture, health and education.

Commerce & industry minister Nirmala Sitharaman, who is a Rajya Sabha MP from Karnataka, is keen for the entire cluster to be developed in Mangalore. The government will fund the effort and ensure that roads, electricity and digital networks are provided for the one of the largest upcoming incubation facilities in the country.

While the cost has not been assessed, a person familiar with the development said, “Government will put all its weight behind it in terms of making resources available. The idea is also to expand the startup drive in cities other than Bengaluru and Hyderabad.”

The incubation centres will provide specialised services for sectors including agriculture, medicine and pharma, along with information technology. The Department of Industrial Policy and Promotion and the NITI Aayog will throw open a grand challenge in March to select the institution that will operate the incubation centres and the school-level tinkering labs. “Innovation has to be encouraged right from the school level… It is a good budding ground for future entrepreneurs, hence there will be a significant thrust on schools,” a senior government official said.

GOVT. TENDERS OUT OF REACH OF STARTUPS

NEW DELHI: Mohan Chandrasekaran’s two-year-old firm AdStringO managed to secure the coveted government approved startup certification but that hasn’t helped smoothen its path to government contracts. Chandrasekaran has been keen for his image compression software firm to secure business from government projects such as the National Savings Certificates scheme and entities such as the National Securities Depository Ltd.

But the eligibility criteria for participating in government projects prove to be barriers too big for the likes of “Much more than funding, startups need business to survive,” said. “The prime minister’s promise under Startup India was that if your product and pricing are good, you can qualify (for government tenders). A couple of times, our proposals got rejected because they were necessarily looking for (companies with) Among the chief attractions of the Startup India initiative has been its promise to allow selected companies better access to public sector projects with easier procurement norms.

Selection for startup India tough “In order to promote startups, government shall exempt startups (in the manufacturing sector) from the criteria of ‘prior experience/turnover’ without any relaxation in quality standards or technical parameters,” states a policy document on the Startup India website. That promise, say startups, hasn’t held true. Government projects mostly are awarded to large companies despite young technology startups offering competitively priced products.

Getting selected for Startup India itself has been a challenge because of its tough eligibility norms, ET reported on February 1. In the 12 months since the initiative was launched, in January 2016, only 522 out of about 1,425 applicants have been selected.

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